Item 15: Q1FY21 Financial Briefing — original pdf

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Austin Energy Quarterly Financial Report 1st Quarter FY 2021 (October – December) Mark Dombroski Chief Financial Officer February 8, 2021 © 2018 Austin Energy Disclaimer This information is unaudited and should be read in conjunction with the audited Comprehensive Annual Financial Reports for the City of Austin, when published on: http://austintexas.gov/service/current-comprehensive-annual-financial-report 2 QUARTERLY Financial Report Agenda Executive Summary Financial Policy Compliance Financial Performance Measures Actual to Budget Analysis Financial Statements Market and Industry Analyses 3 Austin Energy Quarterly Financial Report Executive Summary 4 Executive Summary Substantially compliant with all financial policies. Contingency and Capital Reserve balances below minimums but total cash above minimum of $457m. $ 319 Million Revenues Operating revenues at December are 1.4% under budget due to decreased usage. Generally meeting financial metrics supporting AA credit rating (reaffirmed October 2020). Received credit upgrade from Fitch Ratings in May 2019. $280 Million Expenses Operating expenses are within 1.9% of budget primarily driven by timing of expenses in the first quarter. Balance sheet is liquid and adequately capitalized. Cash decreased $20m due to increased accounts receivable and lower sales. Weather continues to be the major driver for energy consumption. The COVID pandemic has shifted consumption and demand for both residential and commercial customers. This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 5 Austin Energy Quarterly Financial Report Financial Policy Compliance 6 Financial Policy Compliance Financial policies are memorialized and adopted by ordinance each year during the budgeting process Compliance Debt Reserves Operating Non-Compliance Debt Policies Reserves Policies Operating Policies Full Compliance Partial Compliance Full Compliance Contingency and Capital Reserve balance below minimums but total cash above minimum of $457m This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 7 Austin Energy Quarterly Financial Report Financial Performance Measures 8 Financial Performance Measures AA Standard & Poor’s Global Ratings Achieved November 2018 Excessive Liquidity Coverage Efficiency Leverage Deficient Days Cash on Hand Debt Service Coverage Ratio Operating Margins Debt to Capitalization Minimum > 150 Days Minimum > 2.0 Minimum > Minimum < 50% Actual 223 Days Actual 2.0 Actual -4% Actual 53% Excludes General Fund Transfer This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 9 Austin Energy’s Affordability Goal has Two Metrics Financial Performance Measures Compliance Affordability Competitiveness Non-Compliance Affordability Metric Competitiveness Metric Full Compliance Since 2013 Full Compliance Since 2019 Maintain system average rates at or below 2% annual compound growth rate that began October 2012. Maintain an average annual system rate in the lower 50% of all Texas utilities serving residential, commercial and industrial customers as measured by published data from the Energy Information Administration (EIA) Form 861. This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 10 Austin Energy Quarterly Financial Report Actual to Budget Analysis 11 Actual to Budget Analysis Budget Based Operating Revenues Fiscal Year Through December 31, 2020 $ f o s n o i l l i M $160 $140 $120 $100 $80 $60 $40 $20 $0 Billed Base Power Supply Regulatory Transmission Miscellaneous Community Benefit Actual Budget This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 12 Actual to Budget Analysis Budget Based Operating Expenses Fiscal Year Through December 31, 2020 $ f o s n o i l l i M $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Actual Budget This information is unaudited and should be read in conjunction with the audited Comprehensive Financial This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 13 Actual to Budget Analysis Budget Based Fund Summary Fiscal Year Through December 31, 2020 Variance to Budget Variance to Prior Year Favorable (Unfavorable) Favorable (Unfavorable) Millions of $ Actual Budget Amount % Amount % Prior Year Actual Operating Revenues Operating Expenses Operating Income (Loss) Interest Revenue Debt Service Income (Loss) Before Transfers Administrative Support General Fund Economic Development CTM Fund Voluntary Utility Assistance Fund Other City Transfers Internal Transfers / CIP Excess (Deficiency) of Revenues $319 $324 280 $39 1 (39) $1 (8) (29) (2) (3) 0 (1) (15) ($57) 285 $39 2 (39) $2 (8) (29) (2) (3) 0 (1) (15) ($56) ($5) 5 $0 ($1) $0 ($1) $0 $0 $0 $0 $0 $0 $0 (1%) 2% 2% (59%) 0% (37%) 0% 0% 0% 0% 0% 0% 0% ($1) (1%) $328 284 $44 4 (37) $11 (7) (28) (2) (3) 0 (1) (25) ($55) ($9) ($4) ($5) ($3) ($2) ($10) ($1) ($1) $0 $0 $0 $0 $10 ($2) This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm (3%) (2%) (11%) (76%) (5%) (91%) (6%) (3%) (7%) (18%) (0%) (31%) (39%) (2%) 14 Actual to Budget Analysis Actual to Budget Retail Energy Sales ) h w G ( s r u o H t t a w a g i G 1,600 1,400 1,200 1,000 800 600 400 200 0 Actual Budget This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 15 Actual to Budget Analysis Actual to Budget Non-Power Supply Revenues $ f o s n o i l l i M $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Actual Budget This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 16 Actual to Budget Analysis Actual to Budget Power Supply $ f o s n o i l l i M $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Actual Cost Budget PSA Revenue This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 17 Capital Improvement Plan Summary Actual to Budget Analysis Fiscal Year Through December 31, 2020 Type of Financing Type of Project 26% 39% 34% Cash Debt Contributions in Aid of Construction Distribution District Cooling Transmission Joint Projects General Substations Power Production $0 $50 $100 $150 Millions of $ FY 2021 Spend Plan Year-to-Date This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 18 Power Supply Adjustment Cost Components Twelve Months Ending December 2020 $334 Difference between Load Zone And Power Supply Costs $34M or 10% $368 $116 ($12) ($17) Load Zone ($53) Owned Assets Contracted Assets GreenChoice ® and Value of Solar Bilateral and Hedging Net Power Supply 19 t s o C s n o i l l i M $ $400 $350 $300 $250 $200 $150 $100 $50 $0 e u n e v e R ($50) ($100) Austin Energy Quarterly Financial Report Financial Statements 20 Balance Sheet Snapshot $ in Millions Assets Cash Current Assets Capital Assets Long-Term Assets Dec 2019 Dec 2020 $424 282 2,973 1,835 $404 279 2,941 2,153 Capital Reserve $70m Power Supply Stabilization $110m Working Capital and Reserves $692m Working Capital $404m Contingency Reserve $108m Total Assets $5,514 $5,777 Liabilities and Fund Equity Current Liabilities $211 $231 Long-term Liabilities 2,950 3,206 Deferred Inflow of Resources Retained Earnings Total Liabilities & Fund Equity 453 488 1,900 1,852 $5,514 $5,777 $200 $150 $100 $50 $0 $162 $128 $73 $50 $13 1QTR 2020 2QTR 2020 3QTR 2020 4QtR 2020 1QtR 2021 Commercial Paper Program Limits: Tax Exempt $200m Taxable $75m $275m This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 21 GAAP Financial Summary Comparative Statement of Net Position $ in Millions 12/31/2019 12/31/2020 Change Cash Accounts Receivable (net) Power Supply Under-Recovery Non-PSA Under-Recoveries Debt Service Contingency Reserve Power Supply Stabilization Reserve Capital Reserve Nuclear Decommissioning Reserve Other Restricted Assets Other Assets Capital Assets Total Assets Other Current Liabilities Power Supply Over-Recovery Non-PSA Over-Recoveries Revenue Bonds Commercial Paper Other Long-Term Liabilities Retained Earnings Total Liabilities and Fund Equity $424 112 19 $404 ($20) 118 6 0 (19) 1,298 0 11 106 109 70 231 2 2 12 1 108 2 110 1 70 - 237 6 161 229 68 1,546 248 2,973 2,941 (32) 263 141 18 3 3 19 (27) 2,086 162 13 (37) 1,663 192 1,900 1,852 (48) 263 5,514 123 0 46 1,924 50 1,471 5,777 5,514 5,777 Income Statement $ in Millions 12 Months Ending 12/31/2019 12/31/2020 Operating Revenues Power Supply Revenues Power Supply Expenses Non-Power Supply Expenses Depreciation Expense Operating Income/(Loss) Other Revenue (Expense) General Fund Transfer Net Income/(Loss) Debt Service Coverage Debt Capital Ratio $966 489 449 687 234 $85 $41 (110) $16 2.8 51% $943 422 368 767 284 ($54) $118 (112) ($48) 2.0 53% Average Number of Customers Total Sales in Gigawatt Hours 502,781 513,860 3,255 3,022 This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 22 FYTD 2020 FYTD 2021 FYTD 2020 FYTD 2021 Austin Energy Quarterly Financial Report Market and Industry Analysis 23 Annual Change in Customers and Consumption Change in Consumption Growth in Customers During FY 2020, the amount of electricity consumed slightly decreased by 1.9% MWh from prior year due to COVID related shifts in usage. During FY 2020, the number of customers increased by 2.3%, from 496,258 to 507,660. New residential customers account for 95% of the growth in customer count. 1.9% 2.3% ↑ 24 80 70 60 50 40 30 20 10 0 Billed Demand Trend -6% -2% 2% -9% -12% -9% -6% -8% -6% -10% -6% -7% -5% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2020 Current 12- Month Period 2017-2019 Average Jan 2021 25 Residential Weekly Consumption Patterns Residential (GWh) Actual Model Prior Year 3 per. Mov. Avg. (Actual) March 13, 2020 Stay Home-Work Safe 160 140 120 100 80 60 40 20 0 J a n ' 2 0 F e b ' 2 0 M a r ' 2 0 A p r ' 2 0 M a y ' 2 0 J u n ' 2 0 J u l ' 2 0 A u g ' 2 0 S e p ' 2 0 O c t ' 2 0 N o v ' 2 0 D e c ' 2 0 J a n ' 2 1 26 Commercial Weekly Consumption Patterns Excludes Primary Customers Secondary Voltage Commercial (GWh) Actual Model Prior Year 3 per. Mov. Avg. (Actual) March 13, 2020 Stay Home-Work Safe 160 140 120 100 80 60 40 20 0 J a n ' 2 0 F e b ' 2 0 M a r ' 2 0 A p r ' 2 0 M a y ' 2 0 J u n ' 2 0 J u l ' 2 0 A u g ' 2 0 S e p ' 2 0 O c t ' 2 0 N o v ' 2 0 D e c ' 2 0 J a n ' 2 1 27 Confidential & Proprietary ©2018 Austin Energy. All rights reserved. Austin Energy and the Austin Energy logo and combinations thereof are trademarks of Austin Energy, the electric department of the City of Austin, Texas. Other names are for informational purposes only and may be trademarks of their respective owners.